Trade Alert – (SPY) December 18, 2012

December 18, 2012 By Mad Hedge Fund Trader

As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ‘look over’ John Thomas’ shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen.

With today’s major rally, we have squeezed virtually the entire potential profit out of the SPDR S&P 500 (SPY) January, 2013 $131-$136 deep-in-the-money call spread. My post election rally finally came through. It looks like the stock market will close 2012 at the high for the year, as I have been pounding the table about for the past four months.

It is not worth running another month of risk just for five more basis points. If there has been one lesson to learn this year, it is take the money and run. This will free up capital to take advantage of other trading opportunities. It also greatly the overall risk profile of the trading book.

The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous. Don’t buy the legs individually or you will end up losing much of your profit up front. Keep in mind that these are ballpark prices only. Spread pricing can be very volatile on expiration months farther out.

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Disclaimer

It should not be assumed that the methods, techniques, or indicators presented in these pages will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these pages are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.